Treasury cuts taxes to reduce PPE costs

VAT on essential personal protective equipment (PPE) for Covid-19 will be temporarily scrapped saving more than £100 million for care homes and businesses dealing with the coronavirus outbreak, the government has announced.

The government said it has acted "as soon as possible" to bring the measure into force. EU law governing VAT – which the UK is bound to until the end of the transitional period – requires the UK to charge VAT on the equipment.

"The government is acting under an exceptional basis allowed by EU rules during health emergencies. The European Commission recently indicated support for member states to introduce temporary VAT reliefs to mitigate the impacts of the Covid-19 pandemic," the government said. 

The move is particularly aimed to benefit care providers, who are often unable to reclaim the 20 per cent VAT they incur on their purchases.

The government is also providing the NHS with the funding necessary to purchase PPE and has committed to providing extra funding to ensure the NHS has whatever it needs to tackle Covid-19.

It noted it has already acted to speed up PPE supply, harnessing the power of UK industry, scouring the world for new stocks, and creating a giant distribution network to send PPE to keyworkers around the country.